By John Eakins
In 2010 Indecon published a report which looked at the contribution that sport makes to the Irish economy. One aspect of their report is the estimate of €1,885.6 million that they placed on the amount of money that Irish households spent on sport and sport-related goods and services in 2008. This was equivalent to 2% of the overall value of consumer spending in the economy at the time. In this blog I will provide an updated estimate of the economic value of sports related purchases using a similar methodology.
Indecon used the Household Budget Survey (HBS) as the basis of their figures and that will be my start point too. The HBS provides information on the average weekly amount spent by Irish households on a large variety of commodities. Isolating the sports related categories and simply aggregating across all households will therefore provide an approximation for the total annual spend. To aggregate I use data from the recent Census (2011) which gives a figure for the number of private households in the state equal to 1,654,208.
Eight categories of sports relating spending were analysed and the calculations displayed in table 1 below. All values were taken from the 2009/10 HBS except for the ‘Sports/Leisure Wear’ value. This value had to be projected forward from the 2004/05 HBS as no distinct corresponding category existed in the 2009/10 survey. To find this value it was assumed that the share of ‘Sports/Leisure Wear’ spending in total clothing and footwear in 2004/05 remained the same in 2009/10.
Eight categories of sports relating spending were analysed and the calculations displayed in table 1 below. All values were taken from the 2009/10 HBS except for the ‘Sports/Leisure Wear’ value. This value had to be projected forward from the 2004/05 HBS as no distinct corresponding category existed in the 2009/10 survey. To find this value it was assumed that the share of ‘Sports/Leisure Wear’ spending in total clothing and footwear in 2004/05 remained the same in 2009/10.
Table 1: Sports Related Purchases by Irish Households 2009/10
As can be seen from the table €1097.6 million is estimated to have been spent by Irish households on the eight sports related categories in 2009/10. This corresponds to 1.33% of personal consumption in those years (taking an average of personal consumption in 2009 and 2010) and 0.69% of GDP in those years (again taking an average of GDP in 2009 and 2010).
It is possible to project forward to get a value for say 2012 but this requires making certain simplifying assumptions. In particular one can use the change in the consumer price index for each of the categories above to estimate weekly average expenditure per household in 2012. Thus we are assuming a price change only and quantity purchased has remained the same (which is debatable for many of the goods above although any changes in quantities purchased between 2009 and 2012 should not be too significant). Table 2 displays these calculations.
It is possible to project forward to get a value for say 2012 but this requires making certain simplifying assumptions. In particular one can use the change in the consumer price index for each of the categories above to estimate weekly average expenditure per household in 2012. Thus we are assuming a price change only and quantity purchased has remained the same (which is debatable for many of the goods above although any changes in quantities purchased between 2009 and 2012 should not be too significant). Table 2 displays these calculations.
Table 2: Sports Related Purchases by Irish Households 2012
So in 2012 €995.56 is estimated to have been spent by Irish households on the eight sports related categories which
corresponds to 1.20% of personal consumption and 0.61% of GDP in that year. This represents a fall on the 2009/10
figures although in our calculations the primary reason for this has been decreases on the prices associated with these goods.
The values are also much lower than the €1,885.6 million estimate providing by Indecon. Even the 2009/10 estimate is almost 60% below this figure. One of the reasons for this is that Indecon adopted a much broader definition of sports related purchases and included a proportion of the money that households spent on items such as travel, books & newspapers, TV licence and subscriptions and school & university fees. It is also the case that Indecon produced their estimates at the peak of the economic boom. A proper comparison with the Indecon results would require further research but in ignoring these secondary effects, the estimates from this blog are probably a little on the downside. However, even allowing for these secondary effects, it is clear that the recent recession has had a negative effect on sports purchases and this blog has provided a first attempt at quantifying that effect.
corresponds to 1.20% of personal consumption and 0.61% of GDP in that year. This represents a fall on the 2009/10
figures although in our calculations the primary reason for this has been decreases on the prices associated with these goods.
The values are also much lower than the €1,885.6 million estimate providing by Indecon. Even the 2009/10 estimate is almost 60% below this figure. One of the reasons for this is that Indecon adopted a much broader definition of sports related purchases and included a proportion of the money that households spent on items such as travel, books & newspapers, TV licence and subscriptions and school & university fees. It is also the case that Indecon produced their estimates at the peak of the economic boom. A proper comparison with the Indecon results would require further research but in ignoring these secondary effects, the estimates from this blog are probably a little on the downside. However, even allowing for these secondary effects, it is clear that the recent recession has had a negative effect on sports purchases and this blog has provided a first attempt at quantifying that effect.
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